How to Invest in Gold and Silver By Don Durrett

How to Invest in Gold and Silver
A complete guide from an investor’s viewpoint
Don Durrett
(Second Release – June 2011)
Copyright  2011 by Donald David Durrett
All rights reserved.
How to Invest in Gold and Silver
When paper money systems begin to crack at the seams, the run to gold
could be explosive. – Harry Browne
Gold still represents the ultimate form of payment in the world … gold is
always accepted. – Alan Greenspan; May 20, 1999.
Love makes the world go ‘round. Yeah, the love of gold. – Gene Hackman,
from the movie Heist.
There is no other economic good as marketable as gold. – Hans F.
Start now buying gold coins, any kind, and hoarding them. – Dr. John L.
How to Invest in Gold and Silver
This is a long introduction. Don’t skip it. I like to get to the first chapter too, but
there is important information here that explains what this book is about. Consider this
introduction as part of the book.
I’ve been investing in gold since 1991 and silver since 2004. I’m not an industry
insider or financial analyst, but a real world investor. My profession has nothing to do
with investing. I decided to write this book because, when I started investing in gold and
silver Junior mining companies in 2004, I could not find a good book on the subject.
Thus, I made mistake after mistake and had to learn the hard way.
My experience from investing exclusively in gold and silver assets has given me
unique knowledge to write a complete investment guide on these precious metals. I feel I
have had enough hands-on experience to let you know the secrets. Once you’re armed
with these secrets of knowing how to invest in gold/silver, you will likely make a lot of
I have purchased more than 50 mining stocks, all with the intention of seeing
500% returns. That was my goal from the beginning. I want to average a 500% return
when I cash out.
In the gold bull market that we are having today, that is not as difficult as it
appears. The key, of course, is finding excellent stocks with a lot of upside (potential to
increase in value). Most investors would be satisfied with a 5% to 10% annual return. If
you are in that group, then it should be easy to make those returns investing in gold/silver
– as long as this gold bull market continues.
How to Invest in Gold and Silver
When I started investing in Junior mining companies in 2004, gold was under
$500 per ounce and the mining sector was depressed. It was easy, back then, to find
excellent stocks that were undervalued. That will always be the case in a bull market, but
finding a 500% return becomes more difficult as the price of gold/silver increases. Thus,
it becomes more important to be armed with the knowledge of how to invest in these
I discovered that it is really not that difficult to find excellent stocks, if you know
what to look for. However, it took me years to figure out how to search for them. When I
first started, I depended on the views of others, and that is likely what you will do. You
will purchase subscriptions to Internet web sites or investment newsletters, and buy what
“experts” recommend. You might do really well. But trust me, they will also recommend
a few dogs. You will look back on those and wonder why they ever recommended them.
When I first started investing, many of the recommended stocks turned out to be
dogs. Now that I know what to look for, I realize that I could have easily identified these
stocks as “long shots.” Being able to manage the risk in your portfolio by knowing which
stocks are “long shots” and which are much more likely to be “winners” is why you need
to read this book. It’s okay to have a few long shots in your portfolio, but you also need
to be loaded up on less risky stocks that have big upside potential.
You will know which of your stocks are winners. These are the stocks that will
react in a very positive manner when the price of gold increases. While not all of your
stocks will react – depending on their properties and production – some will explode in
value every time the price rises. You need to have enough of these winners so that your
portfolio rises much faster than the price of gold. Ideally, if the price of gold rises 1%,
you want your portfolio to increase by at least 3%.
The only way you can get that kind of return is to heavily invest in Juniors and
Mid Tier Producers. Investing in bullion and Majors will only double or triple your
money, but that’s not where the big returns come from.
Investing in Juniors and Mid Tier Producers isn’t that difficult, but it requires
knowledge, monitoring, and constant vigilance. These are volatile markets, and you can’t
just watch them once a week for a couple of hours and expect to be as successful as
someone who is putting in more time.
How to Invest in Gold and Silver
When you are investing – building an investment portfolio – you have to watch
the markets daily. You have to monitor the price of gold/silver, general market
conditions, and watch certain specific stocks. You have to do the work.
Once you are invested, you can “let your portfolio ride” and watch it periodically,
if you want. But keep in mind that investing in gold/silver mining companies is a job, and
you have to watch the markets carefully for opportunities. I will have more to say about
this in the last chapter on “How to Make Money.”
While I have focused this introduction on Juniors (small mining companies) and
Mid Tier Producers (mid size mining companies), nearly half of my money is in large cap
mining companies, called Majors. This is where I started investing. And most of them
pay an annual dividend, which I can then use to purchase Junior stocks.
Thus, I have included a chapter on Majors. I also cover ETFs, options, bullion,
and coins. I’m big on diversity. I think you should have a little bit of everything – as long
as it is a gold or silver asset!
This book is strictly a practical how-to guide for investing in gold and silver. It’s
not a high-level guide that helps you understand why to invest in gold/silver, although I
do cover that, as well. My focus is more on the what. I will fill you in on what you need
to know in order to invest wisely. I want to help people who want to take advantage of
this bull market and who want to cover all of the angles. Anyone can purchase a gold
mutual fund or a gold ETF (exchange traded fund), and then sit back and make a decent
return. But how much are you leaving on the table? Do you want to do the work and
make the most of this one-time opportunity to make much more?
When I purchased stocks like Hecla Mining at $1.25 and First Majestic Silver at
$1.30 after the stock market crash in 2008, I was excited. I knew these stocks were going
to roar like tigers and far surpass my ETF and mutual fund holdings. I was right. Today
Hecla is trading at $8.07 and First Majestic Silver at $18.17. This allowed me to be
diversified with low risk companies that offered a big upside potential, and I wouldn’t be
locked into minimal returns when gold/silver rose. Showing you how to pick those stocks
and build a balanced portfolio is the main reason I wrote this book.
Now, I am not an expert on picking gold/silver stocks (not even close), but I know
enough to help beginners to become competent amateurs like myself. If you have already
How to Invest in Gold and Silver
been investing in the gold/silver mining sector for several years, you probably already
know everything I’m going to recommend. Moreover, I won’t be going into great detail
on how to value a company or project, because I have not graduated to that level of
expertise. I will include my very simple valuation methods, which I think are perfectly
adequate for these sectors.
This book is for beginners/amateurs who want to know how to invest in
gold/silver in order to get the most out of this bull market. It is for people who want to get
educated on how to invest in these sectors. It’s a short book, so I can’t include
everything. But once you begin investing, you will quickly pick up any additional
information that you may be missing. You will have everything that you need to know to
build a portfolio and get started. This is the book I wish I’d had during the first three
years that I was investing in gold/silver.
Ninety percent of the books out there on investing in gold/silver are total junk. I
know, because I have bought several of them and learned very little. It’s especially hard
to learn how to invest in Juniors. While my seven years of investing in Juniors does not
designate me as an expert in this field, I feel my knowledge is sufficient.
Despite my short experience, you will find lots of good information in this book.
The stock lists (refer to table of contents) alone are worth the price of the book. I include
nearly all of the Majors and Mid Tier Producers that trade in North America, and over
300 of the Juniors. I also categorize each company into one of twelve groups.
I’ve tried to make this book extremely readable. I have been writing books since
1991, and this is my eleventh. The good news is that you found this book, and that a
writer took up investing in gold and silver.
In other words, this book wasn’t written by a professional investor who doesn’t
know how to write, or a writer who doesn’t know how to invest. For that reason, you
should find it a very valuable asset.
Donald David Durrett
May 6, 2011
How to Invest in Gold and Silver
Chapter 6 – Mining Companies: Majors
The asset class of major gold mining companies (Majors) is where I started
investing in precious metals. Most investment advisors say to begin with physical metal,
and I agree with them that bullion or coins is a good foundation. When you think in terms
of managing risk, it is always good to have either bullion or coins in your possession.
They are, by far, the safest investment. While physical metal is primarily for maintaining
wealth, you should also have a core position to diversify risk.
Pyramid of Risk
I think it is a good idea to use all gold and silver investment opportunities
available to you. If you have all gold and silver investment areas covered, you will likely
have a balanced portfolio.
The goal is to have a balanced portfolio that diversifies risk by investing in each
group. Think of it as a pyramid of risk (see below), with each tier being more risky than
the previous one. Your foundation should be bullion or coins. At the top are options,
which should be used sparingly, if at all.
How to Invest in Gold and Silver
I have followed this pyramid to balance my risk. However, I used Major mining
stocks as my foundation (back when gold was cheap). Approximately 40% of my
portfolio is in this sector.
I did not invest in physical metal, although I did purchase SLV, the silver bullion
ETF. This is my only exposure to bullion or coins. Since my focus has been on increasing
my wealth and not just protecting it, gold bullion/coins did not appeal to me. However, I
do think silver is a good investment for increasing wealth. Thus, all of my purchases of
precious metal related assets have been with the intent of returning a large profit.
Some of you with this same high profit motive are likely to bypass Majors and
instead focus on the Mid Tier and Junior sectors. I don’t have any problems with that, if
that is your focus. Majors are starting to get expensive, and the returns will not match that
of smaller companies. When I began investing in Majors in 1991, I was way ahead of the
curve. If I was starting out today, I probably would not invest 40% of my portfolio in
Majors. I would want to diversify a bit more.
How to Invest in Gold and Silver
The best major gold mining stock today is probably Goldcorp. If you invest in it
today (with gold at $1,500), you will most likely triple your money as gold goes to
$2,500. It is a relatively safe investment, and a 200% return in these dismal economic
times is fantastic. However, it is not a guaranteed investment.
Mining is a risky business, and a lot of things can go wrong. For a company as
large as Goldcorp, there are really only two major risks: energy and politics. Energy
prices can explode and drive up their costs. Politics (regulations, taxes, etc.) are always
hard to predict. Currently, Goldcorp has a huge gold mine in Mexico. Mexico could
decide that because they can no longer finance their budget with oil exports, they are
going to use mining taxes instead. Political events such as these are hard to predict.
Mining Returns vs. Physical Metal
An increase in the price of gold/silver generally increases the value of mining
company stocks in an exponential manner. (I will have more to say about this later on.)
This is the reason why they generally have a return higher than the price of the physical
For instance, if you invest in Majors, your return as the price rises to $2,500
should be approximately 150% to 200%. That is more than double what bullion will
return. For this reason, you should consider creating a large position in Majors.
One caveat is the price of energy, which could hamper their profits. However, I
am still bullish that their profits are going to be exploding when we reach the $2,000
I prefer to diversify when I invest in Majors. I do this by using mutual funds and
ETFs. By letting a mutual fund manager pick a portfolio of stocks, they can make the
How to Invest in Gold and Silver
adjustments faster than you can. Normally, the Majors are all going to track/follow the
price of gold. The big issue is that you want to avoid unknown risks.
For instance, the risk factors that can severely impact a mining company are
actually quite numerous: a political event, a strike, a war, an energy shortage, a flood, a
local dispute, an environmental issue, etc. These unique events can hammer the stock
price. Thus, if you pick three to five major gold/silver mining stocks, you have to watch
them and manage them yourself – and react quickly to these events.
Solid Returns
A company like Newmont Mining, which is trading today at $55, will likely make
it to $100, and $150 would not surprise me. I think a 100% return to $110 is a foregone
conclusion. I could be wrong, of course, but that is what I see coming. Let’s make some
conservative projections for Newmont:
Gold Price
Stock Price
Mutual Funds / ETFs
There are not that many Majors, so the easiest way to play this sector is to
purchase either a mutual fund or an ETF. I own two gold mutual funds, and I like the
fact that they send me a dividend check in December. The returns for these funds are
slightly decreased by the management fees (about 1.5% per year) that you have to pay.
But as long as gold hits $2,000, you won’t notice. And from my perspective, these
How to Invest in Gold and Silver
managers earn their fees. That 1.5% fee is like insurance, since they make sure that any
blight in the portfolio is purged. They are also professionals with lots of experience, and
they know which companies to add.
Below are the top performing gold funds in 2009-10.1 I own the Franklin Gold A
fund and recommend it. I also recommend the Tocqueville and Van Eck Gold funds. All
three of these funds are managed by experienced professionals.
Fund Name
Tocqueville Gold
Oppenheimer Gold A
US Global World Pr Mns
Van Eck Intl Inv GoldA
Profund Prec Mtls Ultr
Franklin Gold & PrMt A
OCM Gold
Midas Fund
Vanguard Prec Metals
2 Year Return (%)
Mutual Fund Research
When you investigate one of these funds, there are a few things to look for. First,
go to a web page like Yahoo Finance. Here is the link for the Franklin Fund Gold A fund: Then pull up the Morningstar rating, the fees
to purchase it, the last dividend, and the annual expenses:
How to Invest in Gold and Silver
This fund has a nice dividend at 2.8% (including the capital gain, which is
included in your annual check) and low expenses that are near the 1.47% industry
average. The only downside is that they charge 5.75% to purchase it. But that is normal
for these funds, and not really that bad. Currently, you can purchase a share on
Ameritrade for $40.51 and it is selling at $38.18. Since you are going to hold it long term,
the entry price premium will be paid for by your annual dividends.
After you do some research on an Internet finance site (Google Finance, Yahoo
Finance, etc.), go to the fund’s web page and check the dividend history and the current
portfolio. You also want to understand the portfolio’s focus and investment strategy.
Some funds are more aggressive with Juniors for growth, and others diversify into silver
and platinum. Make sure you are comfortable with the strategy of the fund.
Van Eck Gold Miners ETF (GDX)
In addition to the three mutual funds I recommended, there is an ETF that I
recommend. Its trading symbol is GDX. In fact, if I was just starting out, this would be
the fund that I would buy. The beauty of this ETF is that the fees are very low and the
How to Invest in Gold and Silver
cost to get in is very cheap. For instance, it is currently trading at $43.73 and you can buy
it on Ameritrade for $43.79. That is an unbelievably low premium. If the stock goes up
1%, you make a profit.
The other thing I like about GDX is that it is basically a reflection of the entire
gold Major market, since most of its holdings are gold Majors. In fact, it closely follows
the HUI, which is a popular gold mining index. You can pretty much follow the HUI and
know how this ETF is doing.
Here are the top 10 companies in GDX which make up 68% of its holdings:2
These companies are basically the top 10 gold Majors. This ETF’s holdings
include both gold and a few silver mining stocks. There are no bullion or cash holdings.
By purchasing this ETF, you have basically purchased all of the Majors. This ETF holds
32 stocks: four of them are silver Majors, and the rest are gold mining stocks.
The downside for GDX is that it pays a very low dividend. But the upside is that
you basically get a mutual fund without the high fees and extra costs to purchase it. The
other thing I like about it is that they only focus on the best 32 stocks. If they see a stock
stumbling, they quickly swap it out.
How to Invest in Gold and Silver
From my perspective, if you are going to invest any money in this gold bull
market, then a gold mutual fund or gold/silver stock ETF makes sense. It is relatively
safe, and will return more than bullion. Again, if you only want to maintain your wealth,
then bullion is the place to be invested.
If you want to at least double your money, then using Majors is a good way to go.
I consider this a good foundation or core position for investing in gold and silver. Once
you have your core position, then you can move on to the more risky investment areas:
Mid Tiers, Juniors and options.
List of Silver Majors
In the first portion of this chapter, when I referred to mutual funds, I was talking
about gold. There are more than 50 gold mutual funds that trade on the U.S. stock
exchanges. However, there are zero silver mutual funds and only one silver mining ETF –
Global X Silver Miners (SIL) – but it is a Mid Tier silver fund. I know, I was surprised,
too. It turns out that there is only one silver Major:
Pan American Silver
Date of
Market Cap
Market Cap
Value Per
Last 12
Out –
Last 12
Out –
List of Emerging Silver Majors
Couer d’Alene
First Majestic Silver
Hecla Mining
Silver Standard Res.
Silvercorp Metals Inc.
Date of
Market Cap
Market Cap
Value Per
How to Invest in Gold and Silver
All of the category groupings in the book I have defined using my own criteria.
You can find these definitions in Appendix E at the back of the book. Emerging Majors
are stocks that have a market cap between $1.5 and $3 billion, with gold production
greater than 80,000 oz. or silver production greater than 3 million oz.
Tiny Silver Market
The reason there are so few silver Majors is because silver is normally found with
other metals, and is primarily mined as a byproduct. This is why Silver Wheaton has the
biggest Market Cap. They don’t even own a mine. They get all of their silver from long
term contracts with base metal and gold producers. Basically, they guarantee a price over
the long term that allows base metal and gold producers to hedge the price of silver. As
long as base metal production does not come to a grinding halt, this makes Silver
Wheaton incredibly profitable.
Best Silver Majors
I own Hecla Mining and Silver Standard Resources. I think owning a few silver
Majors is a good way to diversify risk, and I like the upside potential. These are
companies that have huge reserves and solid production numbers and will likely do very
well in this bull market. In my opinion, they are practically sure things. Why? Because
they are the only big players in silver. Once silver jumps past $50, investors are going to
jump on the trend. (Don’t they always?) And investors will have no choice but to buy
them – for lack of any other choices.
One of my favorite stocks is Silver Standard Resources. Today, it is trading at
$30. My forecast is for this stock to trade at $150 before this bull market is over. They
have more than 1.2 billion ounces of silver equivalent ounces in resources (excluding
How to Invest in Gold and Silver
Inferred Resources).3 Their silver production reached 7 million ounces in 2010, and will
continue to rise. Eventually, they will become the number one silver producer in the
world. Once we have a silver shortage, word is going to get out about this incredibly
valuable company.
Silver Wheaton also appears good at first, since they have enough contracts to
make them the most profitable silver company for quite some time. However, I don’t
trust their contracts, which are amazingly one-sided. Silver Wheaton gets silver at $4 and
then they will be able to sell it at $50, $75, or $100. I can’t imagine those contracts
holding. Also, I see a depression coming, and that means less demand for base metals.
Thus, I see Silver Wheaton as risky. But that doesn’t mean this stock won’t explode in
value. It very well may.
Pan American Silver is going to do well. This is another solid stock with lots of
upside. I see this stock going up three times from where it is today ($33). They have lots
of reserves and lots of production. Silvercorp Metals and Hecla Mining are mirrors of
Pan American Silver, only smaller. All three of these companies are going to do
incredibly well, as silver goes north of $50.
This brings us to the last Major: Coeur d’Alene Mines. I don’t know why, but this
company can’t seem to get in gear. It traded at $7 in 2006, and today it is trading at $28.
However, this is equivalent to $2.80, because of a recent 10 to 1 reverse stock split. Can
they get back to their recent high in 2006, which would be $70 after the reverse split? If
they do, the rest of the silver majors are going to do really well. Thus, I would stick my
money in the others.
An Ideal Low Risk Portfolio
An ideal $300,000 low risk portfolio, including only the bottom sectors of the risk
pyramid, would look something like this:
Gold Bullion
How to Invest in Gold and Silver
Gold Coins
1 oz. Gold Eagles
Gold Mining ETF
Silver Bullion ETF
Silver Major
Silver Standard Resources
Silver Major
Pan American Silver
Silver Major
Hecla Mining
I recommend allocating approximately 1/3 to ½ of your portfolio to these
relatively low risk assets. This investment should double or triple, as gold rises from
$1,500 to $2,500. The key to your profits for this portion of your portfolio will be silver.
If silver outperforms gold – which I expect – the silver Majors should do really well.
I excluded silver coins from this portfolio, but if you want some physical silver
coins, I think that is smart. A few junk bags of silver pre-1965 coins will come in handy.
Also, a few 100 oz. silver bars and some rolls of Silver Eagles make a lot of sense.
If you are an aggressive investor, you might exclude gold bullion or gold coins
and allocate this money evenly into the other tiers. That is not recommended, because
you need to protect yourself against the demise of the dollar. By owning bullion
(especially in another currency) and coins, you are being smart and protecting yourself.
Once the dollar goes down, everyone is going to be looking for physical metal.
Which Majors to Pick?
I can give you some pointers on finding the best Majors. But in this bull market, it
really is easy to pick the Majors. You buy GDX, which gets you exposed to most of the
gold Majors, and it gives you a return that reflects the mining industry as the gold price
rises. If you want to substitute one or two gold mutual funds – so that you get a nice
dividend – I can’t argue with that strategy. Note that a good gold mutual fund will
include the best Mid Tiers and some Juniors, and should do better than GDX.
Then you purchase three to five of the best silver Majors to capture silver’s
upside. This will give you a solid core position of Majors at the lowest rung of risk for
How to Invest in Gold and Silver
mining companies. It pretty much guarantees that you will double or triple your money
(if your entry point is $1,500 gold) if gold reaches $2,500. The more you invest in the
silver Majors, the better your return will be.
Okay, for you stock pickers out there who want to pick your own Majors, let’s
look at the factors.
Producing Properties
The most important factor for any company is the quality of their properties. You
have to go to their web page and research their properties. You need to check the
1) Size: How many ounces is the property producing? How many ounces are in
reserve? What is the projected mine life? (How many more years will it produce?)
Ideally, you want to see several properties that are producing significant quantities
and have significant quantities in the ground. An ideal gold property would be
producing more than 200,000 ounces per year, with more than 2 million ounces in
reserve. Also, you don’t want to see a mine life with less than five years
remaining. The stock market will punish that stock if production is going to drop
in the near future.
2) Location:
Very Safe: Canada, United States, Australia, New Zealand
Safe: Mexico, Brazil, Argentina, Chile, Guyana
Moderately Safe: Peru, Columbia, Central America, Indonesia, Middle East,
Eastern Europe, Africa, China.
How to Invest in Gold and Silver
Risky: Bolivia, Venezuela, Ecuador, Russia, Russian Satellites (e.g.
Safety is primarily related to threats to the stock price from political issues,
such as higher taxation and appropriation. You don’t want a Major who has
several strategic properties in moderately safe or risky locations. For instance, if a
Major has a large mine in Venezuela, you probably want to stay away, since there
is a chance it will be appropriated. I will have more to say about location risk later
Note: Coeur d’Alene Mines and Pan American Silver both have large mines in
Bolivia and this has been hurting their stock price recently.
3) Local Issues: Sometimes there are external issues that can impact properties. For
instance, in South Africa they have had trouble getting enough energy to run the
mines full time. Sometimes there are environmental issues, perpetual labor
strikes, native culture issues, lawsuits, etc. Read the past news releases on the
company websites and search out recent impacting issues.
4) Costs: You always need to be aware of the cost per ounce. Is it a low cost or a
high cost mine? Note that costs are always in the local currency. Owning
companies south of the border is an advantage, for this reason. The key thing to
look for is if it is a high cost mine. That will hurt profitability and hurt the stock
5) Ownership: Make sure they own 100%. Often these properties are joint ventures,
and they only own a percentage.
6) Country of Incorporation: If you invest in a company based in Canada, the
value of the stock will be in Canadian dollars. If the Canadian dollar gets stronger,
the stock price will rise in dollar terms. For example, let’s say you buy First
How to Invest in Gold and Silver
Majestic Silver, which is incorporated in Canada, at $4 a share. If the dollar drops
25% tomorrow, then the value of the stock will rise 25%. Thus, it will trade at $5
per share in the U.S.
Development Properties
The same issues you researched above for Producing Properties, you need to
check for their properties under development. If a company has a mine that is going to
begin production in the next 24 months, that is a plus. And if they have two or three
mines coming online, it makes the stock that much better. All this new, upcoming
production will boost the price of the stock.
New mines are one of the most important factors for boosting the price of the
stock. It is often the most critical factor, other than the price of gold/silver. But the
marketplace will not completely price a new mine into the stock price until production
actually begins. Often the stock market will wait until it is proven that the mine will
produce what was promised. This delayed price reaction is where investors seize
Because the stock price does not completely reflect development properties, you
want to analyze these carefully. This is where you can find some gems. When a company
finds large reserves, these will eventually be mined and reflected in the stock price.
Getting in early – buying the stock before the stock price rises – is the key for making
large profits.
For Majors, you want to invest in a company that has a solid production history,
and that is not losing any of their mines due to declining production in the near future.
You want to make sure their forecast is for increasing production over the next several
years. In addition, you want to make sure they have new mines in the pipeline that are
scheduled to come online. In other words, production appears to be stable, and is poised
for growth. Or, better yet, production is forecasted to grow over the next decade.
I will have much more to say about analyzing development properties later on.
How to Invest in Gold and Silver
In the mining business, management is crucial. It is much more important than in
other industries. The reason for this is that mining/exploring is very difficult. Finding a
good management team that has a reputation for good stewardship should be one of your
prerequisites before purchasing a stock. When you find one, which also has good
properties, you are likely looking at a good stock.
Management for Majors is usually driven by the CEO. Find out how long he/she
has been in charge and their track record. Find out by visiting the company stock forums,
and also use Google to search their name. Before you invest in a company, make sure you
are comfortable with the CEO and perhaps the BOD (Board of Directors).
Some management teams are more focused on shareholders than others. This is
not hard to discover, and will be known by other investors. If a management team wants
to continuously increase the size of the company by buying other companies, then they
are going to take on debt. This can be detrimental to shareholders, as profits are
constantly pushed out into the future. Try to find management teams who are shareholder
friendly, which will be reflected in their stock price history.
I have found that good management teams who are shareholder friendly tend to
keep their share structures tightly held (explained below in Share Structure). When you
see companies with more than 200 million shares, this is generally not a good sign for
management looking out for shareholder interest. Conversely, it is a good sign –
especially for risky Junior mining companies – when management owns a substantial
amount of stock. This is a good sign that management has “skin” in the game and wants
the stock price to rise.
Another area of concern is hedging. This is the practice of selling future
production at fixed prices. There will be many management teams tempted to lock in
profits, but this is not shareholder friendly, as profit growth is severely limited. If you see
any hedging going on, identify that as a red flag that could impact the share price.
Although hedging can sometimes be unavoidable for some Juniors to get financing.
How to Invest in Gold and Silver
Stock Price History
Always check a company’s stock chart. If the stock has done well over the last
few years, that is a reflection of good management. You want to look back at least five
years and compare the stock price to the price of gold/silver. If they have consistently
outperformed the metal, that is a good sign. Next, compare their stock price to their peers.
The good companies will stand out. Note that we have been in a bull market this entire
decade (since 2000) and the stock growth should reflect that.
You don’t want to see a lot of volatility in a stock price chart (excluding 2008). If
a company has had an upward price trajectory, it is a good sign that investors know the
story of this stock and they are in it for the long haul. You want to find stocks that other
investors like, and the stock price chart should reflect this fact. If a company has a good
story, the word always gets out.
Reserves/Resources Defined
Inferred Resources: These are resource estimates based on drilling results and geology.
The better the geology is understood, the more likely the estimate will be accurate. These
are generally unreliable without further drilling.
Measured and Indicated Resources (M&I): These are the gold/silver resources that
were determined by drilling and a legal 43-101 report. They are considered to be reliable.
Proven and Probable Reserves (P&P): These are Measured and Indicated Resources
that have been validated through a mine plan, usually called a Preliminary Feasibility
Study. Thus, the only difference between M&I and P&P is a mine plan.
One of the most confusing things about mining stocks is understanding the difference
between resources and reserves. Until a legal mining plan exists in the form of
How to Invest in Gold and Silver
Preliminary Feasibility Study, all ounces in the ground are considered resources. Once a
study is generated, it can turn M&I resources into P&P reserves.
However, it is not that simple. From an investors viewpoint, most of the M&I resources
and some of the Inferred resources will eventually become reserves. For this reason, I
usually include the M&I resources as part of my valuation for that company.
Because Majors have the funds to plan their projects meticulously, they tend to focus on
P&P. In fact, when you hear analysts talk about majors, they only seem to be concerned
with reserves.
Stock Valuation
Note: Valuation Formulas can be found in Appendix B.
I keep stock valuation simple. I look at only a few factors: production ounces,
reserve ounces, cash, debt, cost per ounce, share structure, and Market Cap. Since the
price of precious metals and the reserves in the ground play such a huge role in valuation,
fancy financial models are not needed. At least, that’s my opinion.
I recently heard an interview by the manager of a major gold mutual fund, and he
mentioned the top five things he uses to value a company: 1) Management. 2) Production
Growth. 3) Reserve and Resource Growth. 4) Cost per Ounce. 5) Projected price of gold.
I agree with him – keep it simple when it comes to valuing mining stocks. If the
price of gold is rising, the most important thing is that a company is growing (production
and resources). Those new ounces are going to be revalued higher. That said, we can still
use valuation methods to find undervalued stocks.
The company’s balance sheet (cash and debt) is always important. You want a
company who has low to no debt and lots of cash flow going to the bottom line. The
more debt that they have to finance, the less profit they can make (and the less cash they
will have to expand their business). Thus, debt is a bad thing, so always check it.
How to Invest in Gold and Silver
Do you remember Microsoft in the 1990s? They had no debt, billions in cash, and
were highly profitable each year. As a consequence, Microsoft’s stock made many of
their employee’s millionaires. That is what you want.
Debt Ratio
A good way to measure debt is calculating the debt ratio, which is a simple
calculation of debt to cash flow. This is a no-frills method, but it captures numbers that
are readily available.
Cash Flow = Production minus Costs
(Production oz. x Current Metal Price) - (Production oz. x Cost Per oz.)
Debt = Debt - Cash
(Always subtract cash, since it could be used to pay off debt.)
Debt Ratio = Cash Flow / Debt
Note: Production ounces are usually converted to equivalent gold or silver ounces, since
production nearly always comes from multiple ore types.
Let’s use an example:
Production = 100,000 equivalent ounces of gold
Cost Per Ounce = $700
Current Gold Price = $1,500
Cash Flow = (100,000 x 1,500) - (100,000 x 700) = $80,000,000
Debt = $10,000,000 (debt) - $5,000,000 (cash) = $5,000,000
$80 million Cash Flow, divided by
---------------- = 16 Debt Ratio
$5 million Debt
How to Invest in Gold and Silver
Thus, cash flow is 16 times debt. That is very manageable and not a problem. In
fact, they will likely pay off their debt soon with that much cash flow. However, if the
ratio is less than 5, you may be a little leery. They may have to raise cash by issuing more
stock, which would dilute the stock and thereby limit the upside price potential of the
stock price.
Debt is one of the first things I look at. When I think of debt, I think of net debt,
which is debt minus cash. Thus, when you look at debt, you also look at cash. If they
have no debt, but no cash, that is not good. You want a company with cash to fund
operations and growth. Hopefully, they have enough cash to offset their debt, thereby
increasing their debt ratio. You don’t want a company with lots of debt and very little
cash. All of their cash flow is going to be used to pay off debt.
Cost Per Ounce
The next thing to look at is cost per ounce. Cost has a direct correlation to
profitability. If a mining company has a low cost structure and the price of gold/silver
rises, the stock will quickly rise, reflecting that cost structure. This is the exponential
nature of mining companies that I mentioned earlier. This low cost structure allows an
increase in the gold/silver price to go directly to the bottom line – increased profit.
Use the stock market’s knowledge to your advantage. The stock market will
reward companies that are profitable. If you know a company has a low cost structure
(such as Hecla Mining), then it has a big advantage over the competition. Compare each
Major and see who has a high, medium, or low cost structure.
You will often find that companies focused in Mexico, South America, or other
third world countries will have low price structures. But beware of energy costs. As oil
prices rise, this will affect the bottom line – profit. Thus, do not assume that a low price
structure can be maintained for the medium or long term.
An easy way to determine if a company has low costs is to compare 1/3 of the
spot price of gold/silver. If the cost per ounce is approximately 1/3 of the spot price, then
How to Invest in Gold and Silver
the company has low costs. Conversely, if a company has a cost per ounce more than 2/3
of the spot price, it is high.
Majors are relatively easy to value because you know:
1) Market Cap
2) Production Ounces
3) Resource Ounces
4) Share Structure
5) Cost Structure
6) Debt
7) Cash
We have already looked at debt, cash, and costs. Let’s look now at these other
factors. I like to focus on resources (excluding inferred) and see how the market has
valued them.
Here are four simple valuation methods:
Market Cap Valuation Per Resource Ounce
This is the valuation of the resources in the ground (excluding inferred) on a per
ounce basis. This is the most important valuation for identifying cheap stocks. Often you
can buy Juniors at incredibly cheap valuations versus their resources.
Let’s use Silver Standard Resources as an example:
$2.33 billion Market Cap, divided by
---------------= $ 1.94 Market Cap Value Per Ounce
1.2 billion
Resource Ounces (excluding inferred)
How to Invest in Gold and Silver
Each ounce in the ground is being valued at $1.94. Lower is better, and this is
very low for a producer. Buy low, sell high.
Silver Standard Resources has 1.2 billion equivalent ounces of silver in the
ground (excluding inferred resources). When you divide that by their $2.33 billion
Market Cap, you are paying less than $2 per ounce. Thus, Silver Standard Resources has
a relatively low Market Cap with potential for a significant increase. Buying silver at $2
per ounce in the ground is about as cheap as you will find for a Major. You should
compare all of the Majors and see what it really costs to buy these stocks on a per ounce
Share Price Valuation by Resources in the Ground
This could also be called “Ounces Per Share,” as this is the number of ounces in
the ground that each share represents. Higher is better. This valuation is important
because it shows the explosive potential of a tightly held stock. (I’ll have more to say
about this further down.)
Again, using Silver Standard Resources:
1.2 billion
Resource Ounces, divided by
---------------67 million
Shares Outstanding
= 18 oz. per share
Each share represents 18 ounces of resources.
Each share is worth $684 worth of silver in the ground (18 x $35).
Thus, when you buy a share of Silver Standard Resources, it has an underlying
value of 18 ounces of resources. And since silver is worth $35 today, you are buying
those 18 ounces for less than $2 each. That is very cheap for a Major.
How to Invest in Gold and Silver
Note that this share valuation ignores the Market Cap or share price of the stock.
It is strictly used to value the resources on a per share basis. As stated above, high
valuations are positive because they reveal explosive potential in the stock price.
Resource Valuation as a Percentage of Market Cap
This is the valuation of the resources at current precious metal prices as a
percentage of the Market Cap. This is a very useful valuation to see if a company is
undervalued. The general rule of thumb is that resources from a producing mine should
be priced at 10%, or higher. You will find some companies priced at 20%.
Step 1: Value of Resources:
1.2 billion (Resource Ounces) x $35 (Current Silver Price) = $42 billion
Step 2: Percent of Market Cap
$2.33 billion Market Cap, divided by
---------------- = 5.5%
$42 billion Value of Resources
The resource ounces in the ground are currently valued at 5.5% of the price of
silver. This valuation is very low.
Quick and Dirty Market Cap Valuation
It is easy to do a quick and dirty valuation using resources and the current price
of precious metals. This is just a guesstimate of its current Market Cap value, but it is
considered a conservative estimate.
Step 1: Value of Resources:
1.2 billion (Resource Ounces) x $35 (Current Silver Price) = $42 billion
Step 2: Value of Resources at 10%
$42 billion x 10% = $4.2 billion
How to Invest in Gold and Silver
Actual Market Cap: $2.33 Billion
The current valuation of the resources is highly undervalued.
Note: Resource ounces should include Proven or Probable, Measured and Indicated,
and exclude Inferred.
Share Structure
Share structure is important to understand. I know one analyst (Mickey Fulp) who
ranks it in the top three things he looks at to select a stock. Let’s begin by defining the
Shares Outstanding: This is the number of shares that have been issued, excluding
Options and Warrants.
Options: These are stock options given to employees, contractors, or others who are
affiliated with the company. Each option has a specific price threshold, along with
exercise and expiration dates, which must be met before the stock can be issued. Legally,
stock options must be granted at or above the current stock price. If an option exceeds the
strike price, they are usually sold into the market.
Warrants: These are essentially options owned by private investors that can be used to
purchase stock at a fixed price. Companies give these to investors to raise money.
Investors can then hold the warrants and purchase the stock directly from the company at
a later date at this fixed price (before the warrants expire).
Fully Diluted Shares: These are the combined total of shares outstanding, Options, and
Warrants. Note: It is a good practice to use this number for calculating valuations instead
of the shares outstanding, if you wish to use more conservative numbers.
Float: The float is the number of shares that can be traded. All shares outstanding are not
traded. Normally, there is a small percentage of stock held by company insiders who are
How to Invest in Gold and Silver
long term investors. Also, there can be shares that are restricted from trading. For these
reasons, companies with tight share structures can have a small float. Moreover, a
company with a small float can be highly explosive, since there are fewer shares
available to be traded.
Tightly Held: When there are a small number of Fully Diluted shares, a company’s share
structure is said to be tightly held. I consider anything less than 100 million shares as
tight. But some investors prefer to define tight as closer to 50 million shares.
Dilution: When additional shares are issued, the Outstanding Shares total increases. This
is called dilution. This reduces the earnings potential of each share (see EPS example
below), and reduces the value of each share. This is easy to comprehend. If there are
10,000 shares outstanding and a company is worth $1 million. What happens if they issue
another 10,000 shares? The effective worth of each share has dropped by 50%. In all
likelihood, the stock will also drop by 50%. Thus, dilution is bad.
EPS (Earnings Per Share) =
------------------------------Shares Outstanding
Note: When you think of share structure, think fully diluted shares. Why? Because the
stock market is aware of the number of fully diluted shares and will price the stock
Importance of Share Structure
Share structure plays a vital role in stock price valuation.
Let me give you an example of two nearly identical companies which have the
same Market Cap. (Let’s assume they have nearly the same reserves and production
How to Invest in Gold and Silver
numbers.) The main difference between these companies is the number of shares
Company A
Company B
Shares 500 Million
Shares 100 Million
Stock Price $1
Stock Price $5
Market Cap $500 Million
Market Cap $500 Million
What happens if the stock price rises 100% for both stocks?
Company A
Company B
Shares 500 Million
Shares 100 Million
Stock Price $2
Stock Price $10
Market Cap $1 Billion
Market Cap $1 Billion
Since their Market Cap is in sync, it appears that nothing is different between
these companies. But this is not quite the case. The company with fewer shares had
higher earnings on a per share basis. For example, if they both earned $100 million
dollars, this would be the result:
Company A
Company B
Earnings $100 Million
Earnings $100 Million
Shares 500 Million
Shares 100 Million
EPS 20 cents
EPS $1
Stock Price $2
Stock Price $10
P/E Ratio 10
P/E Ratio 10
Again, it looks very similar. Even though the company with fewer shares appears
to have better earnings, their P/E (Stock Price divided by EPS) ratios are the same. Thus,
Market Cap and earnings appear to be the driving force for the stock price.
How to Invest in Gold and Silver
However, what you need to know is that the company with fewer shares is more
likely to be rewarded with a higher stock price. One reason for this is future dividends. If
dividends are ever issued, investors in Company A (with 500 million shares) will receive
much less money than investors in Company B (100 million shares). That is significant
and will be reflected in the stock price.
This is why one of the valuations of a company is based on the number of shares,
such as the number of ounces of resources per share. For example:
Ounces per Share = Resources / Shares Outstanding
Company A
Company B
Resources 100 Million oz.
Resources 100 Million oz.
Shares 500 Million
Shares 100 Million
oz. per Share .20
oz. per Share 1
Thus, when you look at EPS and ounces per share, it becomes obvious that share
structure matters. This leads to another thing to understand about share structure. Let me
give an example:
Company A
Company B
Shares 500 Million
Shares 100 Million
Stock Price $1
Stock Price $1
Market Cap $500 Million
Market Cap $100 Million
Company A has a bigger Market Cap, but it also has a much bigger share
structure. If the stock price for both of these companies rises 100%, watch what happens:
How to Invest in Gold and Silver
Company A
Company B
Shares 500 Million
Shares 100 Million
Stock Price $2
Stock Price $2
Market Cap $1 Billion
Market Cap $200 Million
As you can see, Company B has much more room for growth since it has fewer
shares and a smaller Market Cap. The more shares that are outstanding, the faster the
Market Cap will rise. This is the main reason people avoid stocks with large share
structures, and why smart investors prefer companies with tight share structures.
You have to discount the value of a company if it has a huge number of shares
outstanding, because its Market Cap will grow quickly as the stock price increases. This
will prevent or hinder the stock price from rising. Conversely, the stock price of a tightly
held stock can increase dramatically as the Market Cap rises.
Since share structure is important, you want to count all “potential” shares, or the
number of fully diluted shares. Companies often have stock options or warrants that
could eventually become outstanding shares. You need to research these. How many
there are, the expiration dates, the strike price, etc. To confuse you, financial web sites
only display total shares outstanding. This understates the fully diluted total. You have to
go to the company’s web site to get the total diluted shares.
Cash Flow Ratio
The next thing to look at is how the stock market is valuing a company’s cash
flow. Earlier, we compared net debt to cash flow. Now we are going to compare cash
flow to the Market Cap. This is done using the following calculation:
Cash Flow Ratio = Cash Flow / Market Cap
I already showed you how to do a no-frills cash flow (under the Debt Ratio
section), so this calculation should be easy to understand. Market cap is simply the
How to Invest in Gold and Silver
number of shares outstanding times the current stock price. The Market Cap is what the
stock market thinks the company is worth. Often this is something like 10 times cash
flow, or 20 times cash flow. The industry average is 10 times, but strong companies such
as Agnico-Eagle can trade at more than 20 times cash flow.
You should use this calculation for each Major you are considering, and see how
they are valued versus their actual cash flow. Try to find a company with strong cash
flow (or projected cash flow) that is not being rewarded with a high stock price. This will
often be an undervalued stock.
Where this calculation really helps is tracking/monitoring a stock. Since cash flow
tends to rise in a bull market, it should be reflected in the company’s stock price and
subsequently its Market Cap. Using this calculation, you can see if increased cash flow
increases the Market Cap. If the Market Cap does not rise, even though the cash flow is
rising, it is a safe bet that the stock is going to rise. Thus, you may want to add to your
position and buy more stock.
The opposite rule is also true. Less cash flow should lead to a lower Market Cap
and the stock price heading lower. Using this ratio, you can track cash flow and see how
the Market Cap/stock price responds.
This is basically an easy way to identify how the stock market rewards the
profitability of a company. This calculation will expose underpriced companies. If a
company has a large cash flow and a low Market Cap, then the stock price has to rise. If
you use this calculation on all of the Majors you are interested in, the good ones will
stand out.
What you are looking for are companies that are either undervalued or
overvalued. The undervalued companies, you want to own. The overvalued companies,
you might want to avoid. Note: be careful about relying on this ratio if the company has a
lot of debt.
Another thing you can do with this calculation is run hypothetical models. What
happens to cash flow if the gold price rises to $2,000? If you monitor how the stock
market values cash flow for a company, you can have a good idea. What happens if
production increases? What happens if costs rise?
How to Invest in Gold and Silver
All of these factors can be monitored or simulated. Professional stock traders run
these numbers all the time. They anticipate how the stock market is going to value the
company in the future. They anticipate how changes can affect a company’s cash flow.
For instance, if you know a company is going to add one million ounces of gold
production next year, you can use this calculation to do a quick check. Is that additional
cash flow already reflected in the stock’s price?
The variables in this calculation are constantly changing (i.e. production ounces,
shares outstanding, mining costs, metals prices, and the stock price). So you can keep a
history and see how the valuation and stock price move. This ratio should be fairly
consistent: more cash flow = higher stock price = higher Market Cap. Over time, you can
get a good feel for what affects the price. This is what professionals do. And this is why
you want to pay attention to what the professionals are saying. They know these stocks
very well, and so can you.
Other Valuation Methods
There are several valuation methods that professionals use, such as net present
value using discounted cash flow, weighted average cost of capital, and economic value
added. All of these are complicated accounting ratios that are a pain to understand and
mock up. For mining shares, I think it is more than adequate to use simple formulas,
along with the rising trend of gold/silver.
For gold/silver mining companies, I don’t think the PE (Price/Earnings) ratio is
important. This ratio is used by a lot of analysts, but I think it is worthless in this case. If
a company has a low PE or a high PE, that doesn’t mean anything, in my opinion.
Because mining companies are valued on their costs, reserves, and the price of the metal,
it makes much more sense to focus on cash flow.
Cash flow and the lack of debt are going to drive the stock price higher. The past
PE doesn’t mean much if gold goes to $2,000. Investors aren’t going to be talking about
past PE ratios. They are going to be talking about increased cash flow and increased
profits. Moreover, as we have seen with technology and Internet stocks, a high PE does
How to Invest in Gold and Silver
not mean that the stock price can’t go higher. So cash flow growth is much more
important than the PE for gold/silver mining companies.
The mining business isn’t that complicated for calculating (or projecting) profits.
You mine ore at a certain cost, and then you sell it at the going market rate. If you are
lucky enough to have a large gold or silver deposit, it is like printing money. This is why
investing in mining companies can be very lucrative in a bull market. These companies
can be very profitable.
Partnerships / Joint Ventures
In the mining business, Majors are always looking for Juniors to partner up with
in a joint venture. Thus, they let the Juniors do the exploring, but they create a
partnership just in case they find something. Most of the Majors have several small
partnerships that have the potential to turn into mines. Don’t ignore these partnerships.
Take some time to see what the Juniors have drilled and what they have planned. The
chapter on Junior Explorers will help you to research them.
Analysts / Web Forums / Web Sites
I always want to know what investment analysts are saying about a company that
I am interested in. For instance, are there any red flags? There is so much information on
the Internet that it makes no sense to purchase a stock without first reading about it. Most
of the material available about a company comes from their web site. The other places are
web forums, analyst’s web sites, and gold/silver web sites. This is the information that
uncovers the details about a company that truly identifies its strengths and weaknesses. If
you did a good job researching a company by checking all the areas I have outlined, your
conclusions should match what the analysts are saying.
If you’re new to web investment forums, make sure you don’t jump to
conclusions or believe everything you read. Remember that people have their own
How to Invest in Gold and Silver
motives and biases, and that you should approach these sites with a healthy dose of
Don’t dismiss web forums, and think there is no useful information to be found on
a forum of amateur investors. Some of the best news originates on Internet sites like:
Yahoo Finance, Google Finance, and
You can get firsthand information from people who have followed these
companies for years. Some of the best information is on web forums. It is often more
timely than paid information. And all the latest news about a company is usually
available – the good, the bad and the ugly.
The best thing about investing in Majors is that a lot of people invest in these
stocks. So there is a lot of information available. With just a little bit of effort, you can
find the best stocks, and everything you need to know about them: their strengths,
weaknesses, and potential.
Gold/Silver Web Sites
In addition to stock research, you should also read about gold/silver in general.
These are sites that are more oriented to news articles that pertain to gold/silver. Many of
them are written by analysts who recommend stocks, but the majority of them are
economic in nature. I think it is imperative to read these sites if you are a serious investor.
It is the only way to time the market for identifying entry prices. My favorite is This site is biased towards gold, but the quality of material is excellent.
Here is a list of gold/silver web sites to visit:
Excellent daily news articles
Excellent daily news articles
Excellent links on this page
Free Internet radio show
Free Internet radio show
Free Internet radio show
How to Invest in Gold and Silver
Free Internet radio show
Books / Newsletters
Generally, the above material is sufficient, but if you are a stickler for doing
research, there are a few more sources of information. I would recommend the CPM Gold
Yearbook and/or CPM Silver Yearbook.4 These books cost $75 each and are published
annually. Try to get a used edition on Amazon. They will tell you quite a bit about each
of the Majors.
There are also many good newsletters on the market. Some of them cover the
Majors (For Majors, I would recommend John Doody’s newsletter at If you want to do a thorough job of analyzing the Majors,
these newsletters can add the missing details and give you a professional’s opinion. If
you are going to invest in specific Majors, spending $300 to $500 for a subscription
service is probably worth it.
I will recommend newsletters for Juniors in the last chapter, but you will probably
want to read a few samples and do your own research. There is enough information on
the Internet to find the good ones. Most of them allow you to purchase month to month or
quarterly when you begin. So if you don’t like one, you can always try another. Here is
an excellent web page with a list of newsletters:
How to Invest in Gold and Silver
List of Gold Majors
Agnico Eagle Min.
Anglogold Ashanti
Barrick Gold
Buenaventura Min.
Centerra Gold
Eldorado Gold
Gold Fields
Harmony Mining
Kinross Gold
New Gold
Newcrest Mining
Newmont Mining
Osisko Mining
Polyus Gold
Randgold Res.
Yamana Gold
Date of
Stock Symbol
Market Cap
Fully Diluted
Cap Value
Per oz.
1 Year
Out –
Gold Majors Defined
This list above includes most (18) of the gold Majors. These large cap gold
mining companies all have a Market Cap over $3 billon dollars. I categorize a company
as a Major differently than the professionals. They define a company as a Major from a
production standpoint. To them, a Major must have production that exceeds 500,000
ounces per year. (Generally, this requires a Market Cap of at least $5 billion.)
I’m more concerned about how much money I can make. If a company has a
Market Cap greater than $3 billion, how much upside is left? The bottom line is that the
greater the Market Cap, the less the upside. Thus, if I define a company as a gold Major, I
see it as having a small likelihood of achieving my goal of a 500% return.
How to Invest in Gold and Silver
I might miss some great companies who happen to have a Market Cap greater
than $3 billion, but that is the risk I am willing to take. I prefer to spend my time
analyzing companies with Market Caps below this threshold. If you are looking for
safety, and have less aggressive investment goals, then using gold mutual funds or gold
ETFs that include companies with large Market Caps makes a lot of sense.
Profit is profit. And many of these Majors and mining companies with Market
Caps greater than $3 billion will make a lot of money in this bull market. It is not foolish
to focus on companies with Market Caps greater than $3 billion. You will do very well.
Companies like Kinross Gold Corp. and Agnico-Eagle Mines have incredible properties
and growth prospects. I don’t see how these companies could fail to triple in value.
That said, this is not where I spend my time doing analysis. That begins in the
next chapter, looking for companies worth less than $3 billion.
List of Emerging Gold Majors
Alacer Gold Corp.
Alamos Gold
Allied Nevada
Aurizon Mines
China Gold Intl.
Detour Gold
European Goldfield
Gammon Gold
Semafo Inc.
Date of
Stock Symbol
Market Cap
Fully Diluted
Cap Value
Per oz.
1 Year
Out –